Business stakeholders require their leaders to cultivate excellent personal integrity and strong values, embrace the willingness to make difficult decisions and exercise wisdom. Successful business organizational leaders should also develop an environment of transparency and openness to maintain the stakeholder trust (Ferrell, & Fraedrich, 2014). A number of models or frameworks exist for organizational leaders to achieve these desirable goals. The models include Six Sigma, Balanced Scorecard, and the Triple Bottom Line (Ferrell, & Fraedrich, 2014). These models help organizational leaders to measure structural and behavioral ethics of the organizations they lead. The focus of this research paper is two of the frameworks: the Triple Bottom Line and the Balanced Scorecard. The paper will analyze the components of the models and examine how the models can be used to enhance business performance and ethics. The paper will also describe how organizations can use the frameworks to drive ethical decision-making and how businesses can integrate the models into their business ethics programs. Lastly, the paper gives examples of organizations using the models illustrating how the organizations have applied them.
Triple Bottom Line
Successful leaders constantly look for methods to improve ethical behavior and performances in their organizations. Henriques and Richardson (2013) posit that the demand and pressure for social performances measurement led to the establishment of accounting, social and ethical auditing and reporting (SEAAR) in organizations. The Triple Bottom Line Model takes into consideration the social, financial and environmental impacts, which affect corporate decisions. Leaders who love to commit themselves to sustainability, corporate social responsibility (CSR) and ethical conduct engage their business organizations via the triple bottom line reporting. In this case, the triple bottom line reporting acts as a means that confirm the leaders’ investments and directives as supporting the organizational values and desirable outcomes.
Many organizational leaders hold the belief that the success of businesses goes hand in hand with environmental and social achievements. The momentum for triple bottom line accounting, according to Henriques and Richardson (2013), is derived from a variety of sources. For instance, corporations should measure all avenues of their performance as per the federal guidelines. Such organizations must evaluate the advantages of the CSR programs involved to make sure that incorporation and development of appropriate devices occur to demonstrate to the stakeholders the value of their CSR activities (Ibid). Corporations or businesses should also incorporate several influential rating organizations, which rank the company basing on social performance. One example of a prominent ranking system, which provides this service, is the Dow Jones Sustainability Index. The Global Reporting Initiative (GRI) also provides a framework, which organizations have applied for use in reporting sustainability and social progress. GRI has the main objective as to disclose an organization’s performance environmentally, socially and in terms of governance. Organizations utilize the GRI in designing standard systems to report nonfinancial results in a way that the report recipients can understand easily. GRI has a benefit of providing the opportunity for a company to compare its sustainability with another company’s sustainability offering them the potential of improving their status in view of the stakeholders.
An example of a business organization using the triple bottom line model is the Honest Company. It started with an aim of making and selling family and affordable baby products that were non-toxic and eco-friendly (Field, 2013). The venture of the business is clearly seen as applying the environmental and social considerations of the triple bottom line model. The company grew into a big organization and has worked with suppliers for the goods they handle (Ibid). The organization has developed a code of conduct, which requires suppliers to comply with environmental, human rights and documentation standards.
As they cultivate a climate that drives ethical decision-making, organizational leaders would like to see their organizations realize success and longevity (Figge, Hahn, Schaltegger, & Wagner, 2002). Additionally, the business stakeholders would like to feel confident that their business activities are not causing harm to others or engaging in ethical misconduct or fraud. Leaders can, therefore, establish methods that measure performances in order to appease stakeholders. These measures can also devise systems, which monitor various components. The Balanced Scorecard management system is another model that leaders can incorporate to measure organizational behavior and ethics. The Balanced Scorecard has four crucial components. These are customer knowledge, financial measures, learning and growth and internal business processes. The mechanisms serve to i) help in achieving desired results and control the performance drivers of the results; b) create a balance between long-term and short-term objectives; and c) manage and monitor objective or hard, objective or fact-based measures and softer more subjective or opinionated measures (Figge, Hahn, Schaltegger, & Wagner, 2002).
The Balanced Scorecard also interprets the mission and strategies of an organization into a more elaborate set of performance measures. It provides the framework that enhances business strategic management systems as noted by Figge, Hahn, Schaltegger andWagner (2002). It is possible to accomplish this by providing various devices, which enable tracking of financial results or outcomes while monitoring the organizational growth capabilities progress. To sum up, the BSC focuses on all components that contribute to organizational success and performance including market, financial, consumer and internal devices.
Shat-R-Shield (SRS) is a Corporation that uses BSC framework (Lair, 2013). SRS specializes in manufacturing plastic shatter-resistant lamps for use in packaging food and consumer products. Karen Ponce, the CEO of the company, has embraced a work ethic that involves working on the business, and not in the business. The organization thus underwent thorough training in BSC (Lair, 2013). The exercise led to the organization discovering how they could succeed by implementing effective measuring strategies, which monitor organizational outcomes. The organization underwent a painful transition process of adopting BSC and has been able to optimize business systems, enhance product development and improve management behavior.
As illustrated in the context above, organizational leaders apply a number of models to improve performance in the job place. The most commonly used models include Six Sigma, Triple Bottom Line, and Balanced Scorecard. The Triple Bottom Line Model takes into consideration the social, financial and environmental impacts, which affect corporate decisions. On the other hand, the Balanced Scorecard management system is another model that leaders can incorporate to measure organizational behavior and ethics. Organizations are capable of implementing the BSC benefits from optimizing business systems, enhancing product development, and improving management behavior.
Ferrell, O. C., & Fraedrich, J. (2014). Business ethics: Ethical decision making & cases. Cengage learning.
Field, A. (2013).Jessica Alba's Triple Bottom Line Startup Raises $25 Million. Available at http://www.forbes.com/sites/annefield/2013/11/17/jessica-albas-triple-bottom-line-startup-raises-25-million/
Figge, F., Hahn, T., Schaltegger, S., & Wagner, M. (2002). The sustainability balanced scorecard–linking sustainability management to business strategy. Business strategy and the Environment, 11(5), 269-284.
Henriques, A., & Richardson, J. (Eds.). (2013). The triple bottom line: Does it all add up. Routledge.
Lair, M. (2013). The Framework of Ethics. Available at http://mayrsom.com/2013/08/02/the-framework-of-ethics/